December 9, 2015 / 10:51 PM / 2 years ago

UPDATE 1-Canada PM will see if can stick to budget deficit target

(Adds quotes on planned budget deficits, importance of spending to achieve economic growth)

By Randall Palmer and David Ljunggren

OTTAWA, Dec 9 (Reuters) - Canadian Prime Minister Justin Trudeau said on Wednesday his government would see if it could stick to its target for budget deficits but stressed he would do what was necessary and responsible to attain the desired level of economic growth.

Trudeau, who also expressed concern about the recent decline in crude prices, won an election in October after promising to limit budget deficits to a maximum of C$10 billion ($7.4 billion) a year.

It was the first time since the election that he has seriously addressed the planned fiscal gap, and Finance Minister Bill Morneau has repeatedly sidestepped questions about it.

In remarks to reporters on Wednesday, Trudeau did not characterize the planned C$10 billion cap as a Liberal promise but only as a goal and a hope, one they would see if they could meet.

“We always aimed for modest budget deficits. We said we hoped they’d be approximately C$10 billion,” the Liberal leader said.

“We will see if we can keep (them) at that level but the two main goals are that our debt-to-GDP ratio continues to decline every year and that the budget returns to balance in the last year of our mandate.”

In subsequent responses, Trudeau said his government would “do what is necessary and responsible” to grow the economy in a way that benefits the most Canadians possible.

“We hoped for and we are certainly striving towards modest deficits of C$10 billion every year, but the center of our plan is the plan to invest in growth and invest in our communities and give direct help to the middle class and those seeking to join it,” he said.

The Liberals have been saying that the economy was worse than forecast, and the fiscal situation not as rosy as their Conservative predecessors had promised in their April budget.

“The spring budget...turns out to have been wildly optimistic in its expectations of where oil prices would be, around what government revenue might be, and things have gotten significantly worse from those rosy projections,” Trudeau said.

Trudeau dismissed last week’s report by the Parliamentary Budget Officer projecting a fiscal surplus for the 2015-16 year, assuming no new Liberal spending plans. The prime minister said that report was merely that of one economist.

$1=$1.36 Canadian Reporting by David Ljunggren and Randall Palmer; editing by Meredith Mazzilli and Cynthia Osterman

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